In six weeks, France will vote on the new European Constitution, which is viewed as a milestone toward a legislative consolidation of EU member states. The goal of the EC is to improve current regulations, clearly divide powers between Brussels and the member states, and help the union play a bigger role on the world stage. But pundits see a dark storm brewing on the horizon; one that could bring the European Union to its knees.

Recent opinion polls on the pending French referendum have shown the distinct possibility of a resounding "non" to the constitution, which has to be ratified by all 25 members. If the French vote on May 29 turns out to be negative, the Dutch on June 1 will likely follow suit. "Defeat for Chirac," states a recent Guardian article, "will push the Dutch, worried about immigration and breaches of eurozone budget rules by France and Germany, into a thumbs-down..." Same goes for Denmark, Poland, etc.

Ironically, at the Laeken EU summit in 2001, France itself promoted the new treaty, and the convention that drafted it was chaired by Valérie Giscard d'Estaing, the former French president. So what's the problem now?

The French, suggested an April 14 article in the Financial Times, "are not voting on the treaty but on the EU itself--and on the administration of President Jacques Chirac." Charles Gave, a prominent French economist, agreed: "This referendum gives them the chance of a lifetime to vote simultaneously against the two politicians they have hated most for the past 30 years: Chirac and Giscard." The media also name other factors, like the weak economy, high unemployment, and an adversity to Turkey's acceptance as a EU member.

There is no Plan B in the event that the new constitution doesn't go through. In that case, the EU will have to make do with the holey rulebook that came out of the 2000 Nice marathon summit. Which is why Chirac has called the country to action in the last weeks, trying to persuade his countrymen to vote in favor of the treaty.

But what's at stake here is not just the constitution but the future of the EU itself.

According to the Financial Times, "there is a gathering sense of foreboding across Europe that the EU is heading for an unprecedented crisis, one which could have profound political and economic consequences for the continent."

Josep Borrell, Spanish president of the European Parliament, foresees a serious crisis, and WestLB Financial Markets crowed that "The EU could disintegrate towards a free-trade zone," a development that "would certainly spell disaster for economic and monetary union, and the European Central Bank."

Other pundits--including WWNK--think such a 'disintegration' would be the best that could happen to the EU. The choice the French now face, says Times op-ed columnist Anatole Kaletsky, could be a sobering wake-up call for European politicians: "A French 'no' vote would be such a shock to Europe's governing elites that the European Central Bank may well recognize that the only alternative to lower interest rates and a weaker euro will be the complete collapse of the single-currency project."

Ultimately, Kaletsky says, it would force Europeans to face the fact "that their living standards, cultures and influence in the world can be preserved only by improving economic performance, not by integrating, harmonizing, enlarging or writing constitutions." Which, he thinks, would open the door to a "liberal ideology of free markets and small government".

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Posted 04-18-2005 2:47 PM by Doug Casey